Monthly Archives: April 2012

Inaugural Anniversary

We are accustomed to seeing our presidents inaugurated in January every four years. The first time we inaugurated a president was a little different. George Washington was inaugurated as first president of the United States on April 30, 1789.

Like any other startup organization, we had a little slippage getting off the ground. We got our Constitution completed in September 1787 but it needed ratification by the states. Evidently agreement wasn’t any easier to achieve in 1787 than it is today. There were apparently pretty fierce fights in some states about ratifying the Constitution. There were even changes to the whole process to allow the Constitution to be ratified by only nine states. As you may remember, we had 13 at the time.

On July 2, 1788 New Hampshire told the Continental Congress that it had ratified the Constitution. At that point, the Congress began to discuss how the new government would be created. Congress finally agreed on New York City and they developed a timeline for the installation of the new government. Each state could select its own electors and February 4, 1789 was the date designated for the electors to meet and cast their votes. They did meet on that day and 69 electoral hours cast their ballots unanimously for George Washington.

Our new government officially came into existence on March 4, 1789. Washington had evidently returned to Virginia and they had to send him word that he had been elected president. Evidently he needed to settle his affairs in Virginia and had to borrow money to pay off his debts there before he went to New York to take up his new duties. He likely arrived sometime before April 30, but there must have been a need for some ceremony.

George Washington came across the Hudson River on April 30, 1789 on a specially built and decorated barge. He was met by a large crowd and they proceeded to Federal Hall on Wall Street where he took the oath of office on the balcony. The president’s inaugural address was delivered to Congress in Federal Hall. There was a celebration afterwards that was opened with 13 skyrockets and 13 cannons shots; the evening closed with the same celebrations.

One of the early concerns of people in our nation was that a leadership position might transform into a hereditary position – like a King.  Washington is sometimes credited with having turned down offers – or suggestions – that he become King, but there seems little evidence that was seriously offered and may be just an American myth.  He did successfully establish executive authority, made good use of a cabinet, and certainly laid concerns about presidential tyranny to rest. 

There was no Washington insurance for a second term, but he was re-elected in 1792 and refused to consider a third term four years later.   He got us of to a pretty good start.  

Insurance Oversight in Washington

There is a long history of efforts to regulate the insurance industry, in particular to determine whether insurance should be regulated at the state or federal level.   In the 1860’s Paul vs. Virginia went to the Supreme Court which concluded that insurance was not interstate commerce and should be regulated under the laws of each under each state.  Eighty years later in the case of South-Eastern Underwriters, the court reversed its decision in an anti-trust case and decided that insurance was commerce and, it was, subject to federal regulation.

The court’s decision did not last long as Congress passed the McCarran-Ferguson Act which returned regulatory power to the states – provided they passed anti-trust legislation.   At the end of 1999, Congress passed the Gramm-Leach-Bliley Financial Services Modernization Act that took away some distinctions between insurance companies, banks, and investment services and exposed the industry to the prospect of increasing regulation at the federal level. 

While the ball was bouncing back and forth at the federal level, Washington State has had a regulatory process since the state was first established.   The Office of the Washington State Insurance Commissioner was created by the first state legislature in the 1889-1890 session.  Its first duty was registering the insurers who were doing business in Washington.  The first insurance commissioner was elected in 1907 and the position has been remarkably stable since then.  Commissioners serve a four year term and there have only been eight different commissioners in more than 100 years. 

The business of the office today is to protect consumers, make certain the insurance industry is regulated in the public interest and that companies, agents and brokers act according to the rules.  The office licenses and audits more than 50 insurers based here in the state and they monitor over 2000 more.  They do testing and license almost 120,000 agents, brokers and businesses that sell insurance in Washington.  Some of the agencies important consumer related functions include looking into insurance related problems for thousands of consumers every year and helping advise consumers on health care issues through a volunteer network of Statewide Health Insurance Benefits Advisors (SHIBA). 

The Office of the Commissioner employs about 200 people and is actually funded though administrative fees paid by the insurance companies.   The Office handles Washington Home Insurance, auto, life and health insurance and any other form of insurance sold in the state.   

Protecting your volunteers

There are an estimated 90 million Americans who perform volunteer service every year. Sometimes, volunteers have accidents. They may injure themselves, injure someone else or have an auto accident involving property damage.  If they are volunteer board members they could risk suit if there are financial or human resource issues in your organization. 

If you work with volunteers, you should be concerned about how to manage their risks and yours. In some states, your organizations commercial general liability policy may cover a claim involving a volunteer. This could affect your own liability policy by reducing your available limits of coverage; it also impacts your organizations experience rating. General liability policies may have exclusions that affect volunteers like incidents involving travel between the volunteer’s home and their place of service.  If you have volunteers who drive on your behalf, your commercial auto policy likely provides little or no protection and the volunteer would be left to rely totally on their own insurance for liability. Even including volunteers as named insured’s under your policy has significant risk.  In that case, you would be sharing your limits of liability and your claims experience with an individual where you don’t have an employer/employee relationship.

There are protections that a volunteer can turn to when and if they face a suit arising out of their volunteer activities – volunteer protection laws, generally called Good Samaritan laws, at the state and federal levels, and insurance. If you are involved with a nonprofit, you should make sure to understand both of these areas as they apply to your organization.  Some volunteers who are homeowners, or even insured renters, may have coverage for volunteer activities under existing policies or, if not, they may be able to obtain an endorsement.  Unfortunately, homeowner’s and renters’ policies don’t usually cover losses stemming from alleged “wrongful acts.”  They generally limit coverage to damages from bodily injury or property damage or perhaps extend to personal injury (libel, slander, defamation, invasion of privacy, etc.). At a minimum, you should be asking your volunteers to check their policies and discuss their volunteer service with their insurance agent to determine the extent to which these policies provide coverage.

Nonprofit policies are available that will defend a volunteer under many different circumstances.  One option is Volunteer Liability coverage that is often combined with a Volunteer Accident policy and purchased by the nonprofit.  Depending on the company and the policy, these policies can provide up to $1 million in personal liability insurance and $500,000 in excess automobile liability insurance above the volunteer’s own insurance as part of its volunteer insurance package. This coverage would provide protection for a personal injury or property damage liability claim arising out of the volunteer’s duties with the nonprofit.  As personal liability coverage, it may exclude errors and omissions in connection with the volunteer’s professional services. In some cases, state-sponsored insurance programs may offer volunteer coverage at a reasonable cost. In Washington State for example, a state supported program offers malpractice insurance at reduced rates to retired physicians who want to volunteer.

Volunteers who driving their own auto while providing service for a nonprofit should be advised to review their personal auto coverage to assure it will extend protection to the nonprofit while the volunteer is driving or behalf of the nonprofit. Washington State requires owners of a motor vehicle to purchase minimum levels of liability insurance or show other evidence of financial responsibility. Volunteers should review their policy limits and consider the need to increase these limits depending on the nature of the services they provide to a nonprofit or the nonprofit should seek coverage to supplement the individual volunteer’s policy.

If you have a group of volunteers who work with your nonprofit, you know that they are like gold – hard to find and easy to slip through your fingers.  It is worth a few minutes of your time to consult with your Washington insurance agent to review your business activities and see what you might need to be certain your volunteers are protected.  Homer Smith Insurance has 60 years of experience here on the peninsula and we are standing by to help.

Nonprofit Insurance Issues

There are over 300 registered nonprofit organizations on the Olympic peninsula – or at last that many with assets.  There are about twice as many in Clallam County as there are in Jefferson and that is similar to the population ratio between the two counties. Many nonprofit organizations are exempt from taxes; they are not exempt from insurance requirements. All nonprofits need to consider their insurance needs carefully.

One important area for nonprofits to consider is Directors and Officers or “D&O” insurance.  D&O insurance defends the nonprofit against acts, errors, misstatements and generally “breaches of duty” by the organizations directors or officers. While different policies may have slightly different definitions and provisions, they broadly cover these breaches by an insured in the discharge of their duties.

The types of events that engender claims under D&O policies include mismanaging organizational assets, failure to provide services and a host of human resource issues – discrimination, harassment, wrongful termination, etc.  It does not cover other areas such as auto insurance, workers’ compensation, or general liability. 

When your nonprofit works in human services or in the health-care field you may need to consider professional liability insurance. Malpractice insurance or errors and omissions provide protection from legal action arising out of improper performance of professional work. Your organization may not need to have this coverage if the professional maintains the coverage themselves.  You may want your organization added as a named insured.  

If you have employees or volunteers who drive their own vehicles while conducting business for your nonprofit, consider auto liability coverage with non-owned auto protection.  You may be held responsible for the actions of your employees or volunteers if they cause an accident while driving on your behalf. 

Check your liability policy for exclusions.  If agencies mission includes kids, the elderly, or the infirm, coverage for abuse will be important to your nonprofit.  Some insurers exclude liability from allegations of sexual abuse or molestation so you need to check your policy for the definitions of abuse in any exclusion. In addition, some policies include abuse coverage by endorsement. Be certain to check your coverage thoroughly to make certain you are appropriately covered. 

A nonprofit may be able to avoid certain taxes; it can’t avoid risk.   You should spend a little time with your Washington insurance agent to review the risks specific to your organization.  Homer Smith Insurance has 60 years experience here on the peninsula, we can help you review and evaluate your nonprofit insurance situation.   

The Famous and the Unknown

For a man who was arguably the most famous writer in the history of the world, we know relatively little about William Shakespeare – for certain.  There’s a good chance he was born on April 23, 1564 in or around Stratford-upon-Avon and a good chance he died on April 23, 1616 in the same place. His legacy is 36 – or maybe 38 – plays and over 150 sonnets likely written over about a twenty year period.  His genius was recognized by some of his contemporaries, Ben Jonson said, “He was not of an age, but for all time,” but he wasn’t widely appreciated for another century or more.

He came from a pretty good family in Stratford-upon-Avon.  His father, John Shakespeare, was a leather merchant and held official positions as alderman and bailiff, an office resembling a mayor; his mother, Mary Arden, was a local landed heiress. Bill probably went to the King’s New School, in Stratford, which taught reading, writing and the classics.

Shakespeare married Anne Hathaway of  Shottery, a small village a mile west of Stratford, on November 28, 1582.  He was18, she was 26, and, she was pregnant. Their first child, Susanna, was born on May 26, 1583 and two years later they had twins, boy and a girl. 

There are no records of Shakespeare’s activities for seven years after the birth of the twins in 1585 until he surfaced as a managing partner in the Lord Chamberlain’s Men, a London acting company.  He seems to have been something of an entrepreneur while he was becoming a famous playwright.  Shakespeare and some business partners built their own theater on the south bank of the Thames River, which they called the Globe, in 1599.  In 1605, Shakespeare bought leases of real estate near Stratford for 440 pounds, which doubled in value and earned him 60 pounds a year. His business ventures seem to have been successful enough for him to live and work in London, commuting home to Stratford – 100 miles and four days ride away – a few months of the year. 

Shakespeare’s profession was listed as actor in documents from 1592, 1598 and 1603.  We know that he acted in his own plays and in a Ben Jonson play.  However, between  writing, managing a theater and commuting between London and his home in Stratford he doesn’t seem to have taken leading roles.  There is some evidence he played the ghost in Hamlet and Adam, a servant in As You Like It. He performed before Queen Elizabeth I and, later, before James I who was a patron of his work.

Life wasn’t always smooth, the Globe Theatre burned down on in June of 1613 after a cannon shot set fire to it during a performance of Henry VIII.  He also seems to have been as much an enigma in his own time as he seems to be now.  He lived a double life as a famous playwright in London but in Stratford he was a well known and respected businessman and property owner. An Anglican Archdeacon, Richard Davies of Lichfield, who had known Shakespeare, wrote some time after his death that he had been a Catholic, which was illegal in his lifetime. 

After the various writers of the Bible, Shakespeare is the second most quoted writer in the English language and two of his plays, Hamlet and Much Ado About Nothing, have been translated into Klingon which gives him a lot of cred with the Star Trek set. 

He was buried at Holy Trinity Church in Stratford-upon-Avon with the epitaph

Good friend for Jesus’ sake forbear,

To dig the dust enclosed here:

Blest be the man that spares these stones,

And curst be he that moves my bones.

His remains are still undisturbed.

There are 230 surviving folio editions of Shakespeare’s work.  Their recent auction value for folio’s in good condition have been over $5 million.  If you find one of these on the bookshelf in your back bedroom, you will want to consult your Washington home insurance agent pretty quickly, but it might not be a good idea to try to sell it.  These 230 books are among the most studied in history and the history and disposition of every one is known.  The first census of folio owners was done by Thomas Dibdin in 1824 and Sidney Lee did a worldwide folio census in 1901, recording the condition and identifying marks of every known copy.

Fire Prevention and Washington Home Insurance

Fires can be pretty scary things especially when they are heading towards your home. About the most you can hope to do if your home is in immediate danger is to hose it down. However, the best idea is to take preventive steps before a fire threatens your home, and to make sure your Washington home insurance is up to date.

Creating a safety zone around your home of at least 30 feet may help to save it in a fire. Take a walk around your property to identify fire concerns and determine what needs to be done to make your house safer. For example, make sure all combustible or flammable containers or objects are stored properly and not left in the immediate area around the home. Consider moving shrubs, vines, and fir and juniper trees growing against or near the home as these may easily catch fire.

Clear away lawn clippings, dead plants, leaves and tree branch debris, as these can become fire hazards. Lawns should be mowed down to 2 inches for fire safety. Keep gutters clear of dried debris as this might catch fire from blowing embers.

After making a safety zone around your home, you might want to check your Washington home insurance with your agent. Now may be a good time to review your policy to check your coverage is adequate for rebuilding if required.

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What Shall I do with my Horseless Carriage?

In the state of Washington, if you have a car that is more than 40 years old, you can apply for a horseless carriage license plate. The vehicle must be in good running order and be operated primarily as a collector vehicle.  Practically speaking that means the 1965, 306 horsepower, Shelby American Mustang you have parked in the garage may qualify as though it was a Model T. 

To apply for a horseless carriage plate you need only purchase a registration and pay a special license plate fee – currently $35 and any other fees or taxes required by law.  Horseless carriage license plates do not need to be renewed; they are valid for the life of the motor vehicle.  As an option, you can also substitute a restored license plate on your horseless carriage.  A restored plate is a Washington-issued license plate designed for use in the year of the vehicle’s manufacture. The plate must be restored so it can be identified with its year of issue and you can’t use a reproduction. 

If all that sounds great, there are some drawbacks.   You can’t use the car for regular transportation as though it was a fully licensed vehicle and you can’t use it for commercial purposes.  You can drive it to and from auto shows, circuses, parades, displays, special excursions, and antique car club meetings.  You can also take it out for test drives and drive it “for the pleasure of others without compensation.”

Washington requires most vehicles that are registered have Auto insurance, be self insured, or get a certificate of deposit or a liability bond as proof of financial responsibility.   Insurance is not required for vehicles licensed as horseless carriages.

What the law requires and what makes good sense are not always the same.  That 65’ Shelby could easily be worth $40,000 or more.  Even driving it in a parade without some sort of coverage may be more risk than you can tolerate.    If you have a car that qualifies as a horseless carriage, it would be worth your while to consult with your Washington auto insurance agent at Homer Smith Insurance to review your options.

The Other Side of History

The news that would have reached the London Chronicle might have read something like this.

Concord, Mass, April 19, 1775.  Troops, having learned of a possible cache of arms and the presence of senior leaders of the insurgency, marched on Lexington and Concord to capture the arms and arrest the rebel leaders.  They were successful in dispersing a small force on the Lexington Green and then approached Concord to complete their mission.   The enemy, estimated at 400 poorly equipped local residents, abandoned the village for a nearby hill without resistance. 

After interrogating some residents, a cannon was found, confiscated and disabled; insurgent leaders John Hancock and Samuel Adams could not be found. The soldiers, having completed their mission elected to return to Boston without waiting for promised reinforcements.  As they started back, insurgent fighters began to attack from concealed roadside positions.  The army lost 73 killed, 174 wounded, and 26 missing; insurgent losses were pegged at 49 killed, 39 wounded and five were unaccounted for.

Of course, we see it a bit differently and a single shot fired at Lexington before the British opened fire and killed eight citizens is now referred to as the “shot heard round the world.”

Paul Revere had kicked off the action on April 18, 1775.   He was working as an express rider to carry news, messages, and copies of resolutions from rebel committees in Boston to places as far away as New York and Philadelphia.  Revere was asked to ride to Lexington to warn Samuel Adams and John Hancock that British troops were marching to arrest them. He was rowed across the Charles River to Charlestown and borrowed a horse to make his now famous ride.

He arrived in Lexington about midnight and delivered his message to Adams and Hancock.  Revere was joined by another rider –one William Dawes, – who had been sent with the same message by a different route.  The two decided to continue to Concord and were joined on that leg by Dr. Samuel Prescott.  On the way, all three were stopped by a British patrol. Prescott escaped almost immediately and continued to Concord.  Dawes evidently escaped soon after, but Revere was held for a few hours before release.  By now Revere was without a horse so he returned to Lexington in time to witness part of the encounter on Lexington Green.

The American Revolution was officially under way on this day in 1775.

When he wasn’t being a courier, Paul Revere was a really talented gold and silversmith as well as an engraver and illustrator.  He was widely known for his silver bowls and tea services and widely admired for political cartoons – one in particular of the Boston Massacre.

Revere eventually had 16 children (not all survived) with two different wives and worked hard all his life to support his family.  In addition to excelling in smithing and art, he offered services carving false teeth, built a powder mill, commanded soldiers, operated a hardware store and built a foundry that manufactured fittings for Boston shipbuilders. Obviously an entrepreneur, he also opened a copper rolling mill in Canton, Massachusetts that made sheathing for the dome of the Massachusetts statehouse and the hull of the USS Constitution.

Revere made over 5,000 items in silver and produced more than 24,000 prints.  If you look around and find one of these items in your personal collection, call your Washington home insurance agent; you will want to review your coverage.  Don’t bother checking the family pewter though.  There are lots of “Revere Bowls” in pewter; he didn’t make any of them.

Antiques

You probably own an antique; or maybe not.  There really isn’t an agreed upon definition of “antique” and it is frequently defined by the seller. It is extremely unlikely your insurance policy will define antique.  Generally, we rely on a reasonable understanding as reflected, for example a definition like that found in the American Heritage Dictionary:

Antique – 1. Of or belonging to ancient times,

2. Belonging to, made in, or typical of an earlier period and

3. Old-fashioned—an object having special value because of its age, especially a work of art or handicraft that is more than 100 years old.

Many antique professionals adhere to the 100 year old part of the definition, but that is abandoned for cars, where the standard has crept up over the years from 25 years old to 75.  The U.S. Customs service considers 100 years old as the standard for “antiques.” 

The definition is actually less important than the fact that basic property insurance policies are designed to handle “ordinary” property. For example, 8 antique Wedgwood tea cups and saucers dating from around 1870-1902 could be valued around $3,000 when sold as antiques. A similar set bought new from Wedgwood today would cost about $320; that would be a good estimate of the replacement value on a claim.  Special property coverage is generally either excluded or severely limited, so it makes sense to protect such property by explicitly adding coverage or by purchasing a special, separate policy.

Before trying to arrange coverage, establish the value of the property. For most people an inexpensive source such as a price guide may be available to determine value. For art or furniture, auction records may be a good, readily available source.  Otherwise, you may need to have the value determined by a professional appraiser or use current receipts or sales bills if items are recently purchased. Document everything that may affect value.  For example, provenance, a term for information that proves an item’s history.  Provenance can affect value when there are facts that affect value – an early year of manufacture, relationship to some historical event or previous ownership by a famous person.

Once a current value is determined, you can begin to look at options.  When there are just a few antiques or collectibles worth a few thousand dollars, you can consider coverage by a rider on a homeowner’s insurance policy. This is typically not an expensive option, but a homeowner’s policy may not be appropriate when a client needs to insure millions of dollars worth of fine art and collectibles. Specialized insurance may be the best option to avoid the exclusions and deductibles of a homeowner’s policy and offers broader coverage and options to underwrite a specific type of collection.  If your collection might travel with you – like art or jewelry – consider an Inland Marine Policy as an option.

To obtain coverage, you will need to provide an insurer with a schedule — an inventory of the items to be insured. The items must be valued by an appraisal, a bill of sale or statement of replacement value, based on the current market price – the information you gathered to value the collection.   Properly describing, scheduling coverage and setting policy limits to protect uncommon and high-priced items will help reduce problems at the time of loss. It reduces the chance of coverage being denied and more clearly defines what is covered and for how much.

If you need coverage for high value antiques, contact your Washington home insurance professional at Homer Smith Insurance to talk about your situation. No matter the value of your antiques, fine art or collectibles, you have a lot of insurance options.

The Business Owners Policy

A Business Owner Policy or BOP is an insurance package that assembles basic coverage useful to a business owner in one bundle. It usually benefits from a bundled price and is sold at a premium that is less than the total of the individual coverage. Business Owners Policies target small and medium-sized businesses and for many owners may be most or all of the insurance they need.  Even if your business requires other types of coverage, you should consider this option.

Eligibility for BOP coverage is based on size and gross sales.  Plans may vary but typically if a business is less than 25,000 square feet in total area or has gross annual sales under $3,000,000 they may qualify.  Guidelines for cooking operations are more restrictive – on the order of 7,500 square feet – due to higher fire and other accident exposures.   Retail operations, wholesalers, small contractors, artisan contractors, dry cleaners, restaurants, offices and convenience stores (even those with gas pumps) are eligible for BOP coverage.

A typical policy includes property insurance, business interruption insurance, crime coverage, vehicle coverage, liability insurance and flood insurance. Additional components can be added to the basic package if there are additional risks a business owner might face. 

The policy’s protection for business property (such as office equipment, copiers, desks, etc.) applies whether the property is located inside or immediately outside the covered buildings. The category also includes property you own, lease or control so long as the property is used by the business.  The list of items that can be covered is a long one.  It includes: 

  • Building additions (completed or being built)
  • Indoor and outdoor fixtures and outdoor furniture;
  • Clothes washers and Dryers;
  • Machinery, equipment materials and supplies;
  • Mowers, ladder, snow blowers, and similar maintenance property;
  • Refrigerating, cooking and ventilating appliances;
  • Dishwashing/Drying appliances;
  • Temporary structures located near the insured premises and
  • Landlord furnishings.

The General Liability insurance coverage included in a BOP is comparable to a typical Commercial General Liability (CGL) policy, providing protection against claims of bodily injury or property damage for which your business may be liable as well as claims for libel and slander or false advertising.  Some situations are usually not covered by a BOP – losses involving most vehicles, money and securities; illegal property (contraband), land, water, growing crops or lawns; or watercraft – but these items can often be added in as options.  Additional property coverage options can include accounts receivable, valuable papers and records, earthquake and spoilage.  Expanded liability coverage can handle additional business interests, limited vehicle liability, losses related to personnel situations, and liquor liability.  Professional liability is not covered under a BOP. 

Typically a BOP policy is very competitively priced and may be the answer to your company’s coverage needs, but remember a BOP does not provide coverage for items such as Workers’ Compensation, Professional Liability Exposures or Commercial Auto Insurance.   Check in with your Washington business insurance professional at Homer Smith Insurance to get more information on the BOP